An extensive well-focused exposé in today's New York Times "DealBook" column, "Banks’ Lobbyists Help in Drafting Financial Bills", documents that Wall Street banks and swaps dealers are writing the Dodd-Frank rules, and also the House bills to implement other Dodd-Frank rules, which are then passing the Financial Services Committee and Agriculture Committee and the full House. Wall Street's rules are being introduced by supported by Democrats and Republicans, while "as its lobbying campaign steps up, the financial industry has doubled its already considerable giving to political causes. The lawmakers who this month supported the bills championed by Wall Street received twice as much in contributions from financial institutions compared with those who opposed them."
Simultaneously, an exposé is out in book form (Act of Congress) that the underlying Dodd-Frank legislation itself was drafted in a process controlled by Wall Street. DealBook today shows that this control is even more obvious when it comes to bills shaping how the endless "rules" of Dodd-Frank are interminably being written.
All of the three exemplar bills exposed, involve protecting derivatives from any regulation, while maintaining their priority for FDIC insurance. One of them is the bill Rep. Collin Peterson denounced April 5 in the Agriculture Committee as among Congress's "great mistakes" which "will come back to haunt you." That bill was almost entirely written by a corporate lawyer, William Bopp, representing the Swaps Dealers Association, and was co-sponsored by Democratic Rep. Jim Himes (Conn.), a former Goldman Sachs banker who heads up House Democratic fundraising. The Times was leaked e-mails which showed Bopp's exact language becoming a Dodd-Frank rule. Bopp claimed it was all "a compromise. Everyone on the Hill wanted this bill" (!), he told the Times, "but they wanted to make sure it wasn't subject to abuse."
Another "free the London $700 trillion" bill which sailed through Financial Services with bipartisan support, was written by Citigroup, "according to e-mails reviewed by the New York Times. The bill would exempt broad swathes of [derivatives] trades from regulation." Of its 85 lines, 70 were written verbatim at Citibank, and House members only changed the singular nouns to plurals. Called by the Times, a Citigroup spokeswoman explained that not just bankers were for the bill—why, Ben Bernanke also supported it!
A third bill described by DealBook, also passed by House Financial Services, was written by Wells Fargo bank.
The column also details how House Democrat fundraising chief Himes and his deputy Rep. Joe Crowley (N.Y.) work hand-in-glove with Wall Street to hook Democrats on Wall Street campaign money, and on freshman Democrats becoming captives of Lloyd Blankfein and Jaime Dimon. Himes is one of the top recipients of Wall Street money himself, and, sounding just like Blankfein, he pronounces it "appalling, it's disgusting, it's wasteful and it opens the possibility of conflicts of interest and corruption. It's unfortunately the world we live in." One's heart goes out.
Himes and Crowley have not only been arranging one $25,000-a-plate Wall Street fundraiser after another, they have also been bringing freshman Democrats up to tour Goldman Sachs's building, meet and chat with Blankfein, and get a "pep talk" from Dimon.
Not mentioned here is how Gary Gensler's Commodity Futures Trading Commission has also caved on regulating derivatives on exchanges, etc., and that Gensler is to resign later this Summer, essentially having been defeated by his former employers at Goldman.